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Iran assures India of smooth oil supply.

Summary: NEW DELHI: India, which buys about 400,000 barrels per day of Iranian crude, has received an assurance letter from Iran that Asia's third-largest economy would receive an uninterrupted supply of crude oil supplies in January, an Indian official said on Tuesday.


Iran has also proposed a temporary payment channel through a bank based in Germany, the official, who did not want to be identified, added.

The letter issued by the National Iranian Oil Company (NIOC) to Indian oil companies said payments can be routed through a euro account at Europaisch Iranische Handelsbank, a German bank where the central bank of Iran has an account, the official said.

The German bank will receive the payment indirectly through the State Bank of India, where Indian oil companies have been advised to open individual accounts, the official added.

Earlier in the day, New Delhi reportedly told Iran that India was okay with paying in UAE dirhams for oil imports from the country rather than Japanese yen.

On Friday, director of the Iranian central bank offered the UAE dirham and the Japanese yen as the possible alternatives for settling bilateral oil trade after the Reserve Bank of India discontinued payments through the 35-year-old Asian Clearing Union (ACU) system.

India's central bank dismantled the ACU on Dec. 27 after the German Bundesbank sought certification of euro transactions with Iran.

The ACU, based in Tehran, is an arrangement where the participants settle payments for intra-regional transactions among member central banks, helping economize the use of foreign exchange and transfer costs. The bloc includes the central banks of India, Bangladesh, the Maldives, Myanmar, Iran, Pakistan, Bhutan, Nepal and Sri Lanka.

Participants in the ACU settle transactions in either the US dollar or euro. Iran had earlier refused to sell oil under the new rules.

Officials at the National Iranian Oil Company, meanwhile, said on Tuesday that the dispute over how payment should be made, has caused no disruption in the sale and exports of oil to India in recent days.

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Publication:Arab News (Jeddah, Saudi Arabia)
Geographic Code:7IRAN
Date:Jan 4, 2011
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